Business

China sends mixed manufacturing signals

The official index of China's manufacturing sector slipped slightly in January, but a private sector measure continued solid growth.

The National Bureau of Statistics Purchasing Managers' Index (PMI) eased from 50.6 in December to 50.4 in January - a level that still shows the manufacturing sector growing slightly faster than average.

However, economists had expected another rise to 50.9, leaving the market a little disappointed with the actual outcome.

In contrast to the official figures, HSBC's PMI, which tends to focus on smaller private manufacturers rather than large state-owned firms, recorded another month of growth, rising from 51.5 in December to 52.3 last month.

That index shows output expanding at the fastest pace in almost two years.

Both surveys showed that producers focused on supplying local consumers were faring better than those selling to export markets.

HSBC's chief economist for China, Hongbin Qu, says the PMI is showing a continued economic recovery.

"We see increasing signals of a sustained growth recovery in the coming months: the steady investment growth led by infrastructure projects, the improving labour market conditions boosting consumer spending, and the ongoing re-stocking process to lift production growth," he noted in the report.

However, many analysts are treating the January and February PMIs with caution, due to the timing of Chinese New Year, which was in January last year and will fall in February this year.